Although AI companies once declared that they would never run ads in chatbot services, and even CEO Sam Altman once described advertising as a "last resort" business model and believed that combining it with AI would bring a unique sense of unease, the industry has now completely reversed. However, according to the latest analysis from market research institutions, it is difficult for major technology companies to obtain the expected huge benefits from chatbot advertising.
A market analysis by consulting firm Emarketer has raised serious questions about OpenAI's advertising revenue targets. As OpenAI began testing ads in ChatGPT in February, opening up a new source of funding for its massive operating costs, the company's internal forecasts are well beyond what the overall U.S. chatbot advertising market can support.
OpenAI has previously stated that it expects to generate $250 million in advertising revenue by the end of this year and achieve a huge revenue target of $10 billion by 2030. However, Emarketer’s research points out that OpenAI’s advertising revenue may fall 90% short of its 2030 target. This is just the first in a series of setbacks for AI companies trying to generate significant revenue through advertising. Emarketer estimates that independent chatbot services, including OpenAI, Microsoft, Google, Amazon and others, will generate less than $1 billion in total advertising revenue in the United States this year. In contrast, OpenAI itself hopes to reach $250 million. By 2030, Emarketer predicts that the entire market will only reach US$5.4 billion.
This forecast doesn’t cover all AI-related ad spend, though; it excludes a lot of the traditional ad spend placed next to “AI search” content like Google’s AI overview. Emarketer expects the broader U.S. AI advertising market to reach $68.25 billion by 2030, but most of that spending will remain outside of standalone chatbot conversations. Analysts admit that OpenAI’s advertising revenue goal is not completely impossible to achieve, but it will be extremely difficult to achieve unless there are huge changes in consumer behavior that subvert the traditional advertising market.
First, if advertisers completely abandon traditional search engines such as Google, social media, and other channels and switch to an advertising experience entirely based on chatbots, OpenAI’s advertising revenue may indeed grow exponentially. The developer of ChatGPT will then need to outcompete competitors in this new advertising-driven business to achieve its expected revenue target of $100 billion within five years. In theory, OpenAI hopes advertising will account for a third of its projected future revenue.
Will mathematical calculations and financial speculation finally overcome market realities and turn the chatbot business into the money-printing machine that AI companies have promised for years? AI enthusiasts, represented by SoftBank Group CEO Masayoshi Son, are still willing to make huge bets on such a future. Meanwhile, OpenAI reportedly plans to spend around $600 billion on computing power by 2030, underscoring how much revenue the company needs to earn before its economic model can really start to work.